US, UK tout 1815 pact as ‘Brexit’ question looms

The United States and the United Kingdom this week are marking the 200th anniversary of an agreement that ended decades of trade conflict dating back to the Revolutionary War. But it comes at a fraught moment in the U.K.’s relations with Europe that has prompted U.S. officials to warn Britain to carefully consider its next steps.

The Friendship, Commerce and Navigation Treaty of 1815 will be on display “for one night only” at a reception Thursday hosted by U.K. Ambassador to the United States Peter Westmacott and U.S. Trade Representative Michael Froman at the National Archives Museum.

For the ambassador, the celebration caps several years of commemorating famous battles from the War of 1812 and building support for the proposed Transatlantic Trade and Investment Partnership between the United States and the 28 nations of the European Union, including the U.K. The U.S. and EU hope to complete the deal before President Barack Obama leaves office in 14 months, joining together the world’s two largest economies, covering more than $35 trillion in economic output, or roughly 46 percent of the world total.

But one looming complication of the deal is that many Britons want out of their four-decade-old membership in the EU, complaining the U.K. pays billions of pounds in membership fees and gets little in return. Those British critics accuse the EU of imposing too many rules on business. They want the country to take back full control of its borders and reduce the number of other Europeans crossing the English Channel to find work and believe the U.K. could do better striking trade deals on its own.

British Prime Minister David Cameron has promised to hold a referendum on a possible British exit, or “Brexit,” from the EU before the end of 2017, and many observers expect him to make good on that pledge as early as next year.

Froman made headlines in October when he told Reuters the United States wasn’t that interested in a separate free trade agreement with the U.K. if the British people voted to strike out on their own. He also warned British exports to the United States could be hurt if the rest of the EU strikes a deal to eliminate U.S. tariffs and the U.K. is left out.

“I think it’s absolutely clear that Britain has a greater voice at the trade table being part of the EU, being part of a larger economic entity,” Froman said. “We’re not particularly in the market for [free trade agreements] with individual countries. We’re building platforms … that other countries can join over time.”

British politicians opposed to the U.K. leaving the EU seized on the comments, which they said show the folly of the succession movement.

“U.S. Trade Representative Froman is absolutely right in pointing out that leaving the EU would be detrimental for U.K. interests in terms of trade – as would be the case for many other areas of major importance to the well being of British citizens,” said Neena Gill, a British member of the European Parliament. “Froman clearly debunks Eurosceptic claims that the U.K. would be better off negotiating its own trade agreements rather than instead of within an EU framework.”

The irony behind the Brexit debate is that Cameron’s government has been one of the strongest advocates of an EU trade deal with the United States. Not long after Brussels and Washington launched talks on the TTIP, the British Embassy rolled out a joint report with two think tanks – the Atlantic Council and the Bertelsmann Foundation – extolling the potential job and income gains from the creation of the world’s largest free trade area.

The U.K. already is the largest foreign investor in the United States, with $519 billion in assets in 2013, well ahead of Japan with $342 billion. In addition, it was the United States’ seventh largest trading partner in 2014.

But trade relations between the United States and Great Britain are in far better shape today than they were more than 200 years ago when British troops set fire to the White House, Capitol and other government buildings in Washington.

In the years after the Revolutionary War, American hopes of being freed from the economic shackles of the British Empire were dashed. American merchants were still barred from trading directly with British colonies and had to move their goods through London instead.

Determined to teach England a lesson over practices, such as the impressment of American sailors into the Royal Navy, President Thomas Jefferson imposed an embargo on British goods in 1808. “It completely backfires and he leaves office with a big stain on his legacy,” said Gautham Rao, an assistant professor of history at American University who specializes in early American legal issues.

Tensions continued to rise during the early years of the administration of President James Madison, who declared war on Britain in 1812. The United Kingdom slapped an embargo on the United States in response, although many New England merchants continue to trade with the former colonial master.

While battles raged on this side of the Atlantic, Britain and the rest of Europe were consumed by the final years of the Napoleonic Wars, which began in 1803. Tired of the fighting, the United States and the U.K. negotiated the Treaty of Ghent in December 1814, which ended hostilities. But the Treaty of Ghent didn’t really deal with the economic irritants that prompted Madison to declare war on Britain in the first place.

That was accomplished through the Friendship, Commerce and Navigation Treaty of 1815 negotiated for the United States by a trio of leading early American figures led by John Quincy Adams, Henry Clay and Albert Gallatin, whose statue now who stands in front of the U.S. Treasury Department.

“I think [the treaty] was a very important moment when we put the previous differences and irritations behind us and began to be major trading partners with far fewer barriers and obstacles,” Westmacott said in an interview. “That was the last time the Brits and the Americans were not on the same side in pretty much every conflict that’s happened since then.”

In contrast to modern trade agreements, which can run thousands of pages, the 1815 pact is extremely short. It has just five articles, including one which simply made the pact binding. Two others guaranteed free and secure access to each other’s ports and barred the two countries from arbitrarily hiking duties on each other’s goods, a common form of “commercial warfare” at the time.

The third article opened up the far reaches of the British Empire to direct U.S. commerce, although with some restrictions. American ships could stop at Cape of Good Hope in modern-day South Africa “for refreshment, but not for commerce” on their way to trade with British territories in India. The fourth article established a system for resolving disputes, although most merchants preferred to use American or British courts instead.

“Broadly speaking, this is the beginning of more amicable relations between the two countries and certainly economically, very complementary relations,” said Rao, noting how the continued rise of the British Empire during the 1800s helped fuel strong economic growth in the United States through most of the century.

Westmacott said he takes seriously Froman’s warning that the United States would not be in a rush to pursue a standalone free trade pact with the U.K. But even if Washington changed its mind on that point, London might have to settle for a second-best agreement from its point of view.

“Common sense suggests if you are negotiating as part of a block of 28 major industrialized countries with a population of 450 million, you probably are going to get a more meaningful and a more balanced deal with the United States … than if you’re one little country trying to negotiate against a leviathan,” Westmacott said.

Cameron, despite his promise to hold a referendum, hopes to negotiate a package of reforms to increase the accountability, transparency and competitiveness of the EU and use that agreement to persuade the British public not to pull out of the economic bloc.

“The prime minister, I know, hopes that he will be successful in the negotiation and he will be able to take a good package to the British people and we will stay in. But there are a number of uncertainties that are still out there,” Westmacott said.

Meanwhile, the U.K. will continue to work within the EU to get the best possible TTIP agreement. “We very much hope that this can be done on President Obama’s watch because there is a strong political commitment of this administration, as there is on the part of my government,” Westmacott said. “So fingers crossed.”

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Steve

Like who, Turkey? And Azerbaijan, etc, etc? Whatever that would be, it would not be Europe anymore.

Posted on 12/5/15 | 12:00 AM CET

Freeborn John

“Common sense” is is frequently one when it comes to trade. Small countries like Iceland and Switzerland have free trade agreements with large countries like China which the EU has not been able to complete. Mexico and Canada already have free trade agreements with the EU and the US does not. There is no doubt the US and Uk could easily negotiate a free trade agreement but it is not currently in the interests of Cameron to say that while he plans to campaign against brexit. The foreign Office & state Department are simply saying what their heads of government find convenient to say right now, but make no mistake; if the UK leaves the EU the politicians will be scrambling to put free trade agreements together.